We analyze myopic trader models of noisy prices in financial markets. Unlike extant analysis, such as De Long et al. (1990a), a classical equilibrium exists in our analysis, e.g., a riskless perpetuity is priced by arbitrage and its price does not vary with noise. A unique noisy equilibrium...

A new algorithm for asset allocation is developed. The algorithm provides consistent approximations to the optimal savings allocations which are dependent upon personal characteristics such as age and income. Numerical analysis is used to solve an individual's lifetime consumption-investment...

We examine the effects of a systematic increase in the agents operating costs in a standard agency setting with moral hazard. We identify conditions under which the agent benefits from the increase in his costs. Perhaps more surprisingly, we show that the principal and he agent can both benefit...

We investigate when identical agents will be treated asymmetrically in a simple team setting. Asymmetric treatment is optimal when the agents individual contributions to team performance are complements. Symmetric treatment of identical agents is optimal when the agents contributions are...

We demonstrate the value of equal pay policies in teams, even when team members have distinct abilities and make different contributions to team performance. A commitment to compensate all team members in identical fashion eliminates the incentive that each team member otherwise has to sabotage...

This book applies new advances in economic theory regarding the asymmetry of information between firms and their regulators to the design of improved telecommunications regulation.